Agenda

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14.

City Council Regular Meeting

Meeting Date:

09/24/2019

BACKGROUND

The Schertz/Seguin Local Government Corporation (SSLGC) was created on December 23, 1998 on behalf of the City of Schertz and Seguin to assist in acquiring water outside of the Edwards Aquifer. The Corporation was created by the Cities to operate a wholesale water system for the benefit of the two City’s Utility Systems. The Corporation has financed the construction of well fields and cross-country pipelines and today provides a reliable, drought-resistant water source. The Bonds are supported by Contracts between the Cities and the Corporation and the liability is evenly split between the two Cities. Currently, SSLGC has $136,745,000 of Bonds outstanding.

In June 2012, the SSLGC issued $25,425,000 Bonds at the request of the San Antonio Water System (SAWS) so they could tie into the SSLGC system. Per the agreement, SAWS would solely pay the annual debt service instead of SSLGC. Of the original amount, $22,395,000 remains outstanding and currently able to be refunded.

Due to the low current interest rates the SAWS Contract Revenue Bonds can be Refunded for savings. We currently estimate that the Refunding will save SAWS approximately $2,185,000 over the life of the Bonds. Since SAWS is the only entity paying the Debt Service on the Bonds, they will be the only ones to have an economic benefit. Schertz and Seguin must authorize any bond issuances by SSLGC, including refundings, and must approve the sale of the refunding bonds even though neither entity will benefit directly from this action.

SAMCO Capital Markets, the City’s and the Corporation’s Financial Advisor, proposes to sell the refunding bonds on November 5, 2019. To complete the transaction, the SSLGC Board will need to approve proceeding and then each City and SAWS will need to ratify the SSLGC Board action. The SSLGC Executive Committee was briefed on the Refunding Proposal on September 12, 2019 and the full Board considered the Refunding on September 19, 2019. Assuming the SSLGC board approves the refunding idea, the Board will take formal action on October 17, 2019 to formally authorize the refunding. The City of Schertz and Seguin would meet November 5, 2019 to ratify the LGC’s action. Only after the two City’s approval can the SSLGC proceed to a bond sale.

At this time there are is no action required by the City Council. This is a briefing to inform you that if market conditions remain favorable, City Council will be asked to consider the Refunding at the November 5, 2019 meeting.